RES

RENEWABLE ENERGY SOURCES
IN ESTONIA, LATVIA
AND LITHUANIA:
strategy and policy targets,
current experiences and future perspectives
2003
RENEWABLE ENERGY SOURCES
IN ESTONIA, LATVIA
AND LITHUANIA:
strategy and policy targets,
current experiences and future perspectives
Editorial team:
Heidrun Fammler, Baltic Environmental Forum
Daina Indriksone, Baltic Environmental Forum
IngrÏda BrËmere, Baltic Environmental Forum
Tiina Kˆster, Baltic Environmental Forum
›ymantas Morkvònas, Baltic Environmental Forum
Jana Simanovska, Baltic Environmental Forum
External experts:
Teolan Tomson, Energy Research Institute, Tallinn Technical University, Estonia
J‚nis ReÊis, Latvian Development Agency, Latvia
KÍstutis Navickas, Regional Environmental Centre, Lithuania
Veit B¸rger, ÷ko-Institut, Germany
English language editing:

Andis ZÏl‚ns, Latvia
Photos:
Daina Indriksone, Baltic Environmental Forum
›ymantas Morkvònas, Baltic Environmental Forum
© Baltic Environmental Forum

Peldu iela 26/28
LV-1050 RÏga, Latvia
http://www.bef.lv
© Printing House: Jelgavas Tipogr‚fija, Latvia

Graphic design: Daiga Brinkmane, Latvia
This study is printed on recycled paper
ISBN 9984-9714-1-4
TABLE OF CONTENTS
1 Introduction 7
2 Meeting EU requirements 9
3 Policy targets in the three Baltic States 11
4 National legislation 13
5 Economic instruments for supporting renewable energy sources 15
5.1 Electricity market 15
5.2 District heating 16
6 Use of different renewable energy sources in the Baltic States 19
6.1 Wind energy 19
6.2 Hydropower 25
6.3 Wood-based fuels 31
6.4 Straw 37
6.5 Biodegradable waste 41
6.6 Peat 45
7 Conclusions 49
7.1 Monetary support 49
7.2 Administrative support 50
7.3 Research and development, pilot projects 50
7.4 Soft instruments 50
8 Annex 51
9 References 55
RENEWABLE ENERGY SOURCES IN ESTONIA, LATVIA AND LITHUANIA:
strategy and policy targets, current experiences and future perspectives
4
Editorial Dear Reader,
Discussions on the use of renewable energy sources are high on the global agenda. In
light of the well-known reluctance of the United States to sign the Kyoto Protocol and
substantially reduce greenhouse gases emissions, and compared to the energy
consumption and needs of large and highly industrialized countries, the Baltic States are
little dwarfs in the global arena of key energy players. In international reports on the
energy sector the Baltic States may go unnoticed. Therefore, this brochure is published
to introduce readers to the particularities and newest developments in Estonian, Latvian
and Lithuanian energy policy and resources.
Energy sources and in particular, strategies and policy targets for the use of renewable
energy sources are important issues for the Baltic States. For Estonia and Lithuania the
primary energy sources oil shale and nuclear power, respectively, are problematic and
during accession talks with the European Commission were negotiated with great
difficulty since from a socio-economic point of view these energy sources are important to
these countries. For Latvia, its high dependence on imports of primary energy sources and
electricity from Estonia, Lithuania and Russia is problematic, especially in the latter case,
where relations are strained.
This study highlights the differences in the renewable energy policies of the three Baltic
States not only from the standpoint of the differences in the main sources but also in
terms of the economic incentives used to stimulate the development of the renewable
energy markets. Attention is also drawn to the similarities - the inherited electricity
network and the lack of investment capital.
This study provides insights on how the Baltic States will meet the EU targets for the
use of renewable energy sources and the national goals and targets that have been set by
each country. Information on recent legislative initiatives and economic instruments
applied to support the goals of the legislation is provided. The main part of this study
provides an analysis of the use of different renewable energy sources - wind energy,
hydropower, biomass - for electricity and heat production from the standpoint of
potentials, history, economic factors and public opinion. Three local experts - Mr. Teolan
Tomson from Estonia, Mr. J‚nis ReÊis from Latvia and Mr. K´stutis Navickas from
Lithuania contributed most of the background information as well as analyses for this
study. Conclusions and recommendations were elaborated by Mr. Veit Bürger, an expert
from the Institute for Applied Ecology (Ö ko-Institut), Germany.
We hope you find it interesting reading.
For the editorial team
Heidrun Fammler,
BEF Project Manager
Acknowledgement The editorial team would like to express its thanks to all those who contributed to the
success of this study by organizing site visits and providing information, data, and valuable
suggestions and comments.
5
6
1
INTRODUCTION
Energy production from renewable energy sources (e.g., wind, hydro, biomass, wood,
solar, geothermal, tidal and others) has lately been receiving increasing attention all over
the world. One of the reasons for this is the increasing concern of industrialised countries
and economies in transition about reducing green houses gas emissions. Another reason is
diversification of energy sources and development of new technologies. Use of renewable
energy sources (RES) is a topic for discussion on a wide scale, in particular, for the media,
government policy makers, the energy industry and environmental and other interest
groups.
In order to increase energy production from domestic energy sources, to decrease the use
of fossil fuels, as well as to reduce the greenhouse gas emissions different local RES are
used for energy (electricity and heat) production in the Baltic States.
However, energy production from RES is by far not sufficient to cover the energy demand
in Estonia, Latvia and Lithuania, where mostly non-renewable energy sources are used.
For example, in Estonia about 58% of the total primary energy supply (TPES)1 (90% of
electricity production2) is covered by one domestic fossil fuel - oil shale. In Lithuania about
31% of the TPES (77% of electricity production3) is presently generated in the Ignalina
Nuclear Power Plant. Lithuania has committed to close down the plant by the year 2009,
which will significantly influence the electricity supply in the country and therefore,
alternative energy sources need to be considered. Latvia has the smallest share (66%) of
non-renewable energy sources in the total primary energy supply. In order to cover the
local energy demand various fossil fuels, such as, oil products, shale oil, coal and coke, as
well as, natural gas and electricity are imported from Estonia, Lithuania and Russia.
RES play a different role in the three Baltic States. In 2001, the energy produced from
RES - wood-based fuels, hydro energy and wind, as a percentage of the total primary
energy supply, was 11% in Estonia, 34% in Latvia and 8% in Lithuania. In all three Baltic
States the share of RES in the primary energy supply has increased during the last decade.
Biomass (mostly wood-based fuels) is the most significant local renewable energy source.
Estimates show that they will likely remain the major RES in the future. Concerning other
RES, energy production from hydro sources is already important in Latvia. Furthermore, in
Estonia and Lithuania the use of hydro energy may increase in the future. However,
besides the benefits of hydro energy production the potential negative environmental
impacts also have to be considered. Energy production from wind has a good potential
especially in the coastal areas despite possible conflicts with nature protection regulations.
In addition, there have been developments in energy production from biodegradable waste
and straw, although currently, they are much less important in the total primary energy
supply. Their potential still has to be investigated.
Electricity generation (photovoltaics) and heat production from solar energy on a

commercial basis is not developed yet in the Baltic States. Very high investment costs
(particularly for electricity generation), if compared to conventional energy production, are
among the main burdens for developments in this field. On the other hand, high
theoretical potential and very low negative environmental impacts most probably will
favour the development of solar energy in the future. So far only a few pilot projects have
been carried out in order to utilise the potential of solar energy e.g., electricity production
in a few lighthouses in Estonia, heat production in small boiler houses in all three Baltic
States. A few pilot projects on the use of geothermal energy have also been carried out.
However, there is a need for additional investigations regarding the use of potential of solar
and geothermal energy by implementing additional pilot projects. Thus, these RES are not
included in the present study.
Peat as a local resource is available in all three Baltic States. Although commonly not
considered as a RES, there are experts both in the Baltic States and abroad4 who regard
peat as a “slowly renewable energy source”. Thus, the use of peat for energy production
is taken into consideration in this study.
1
Total primary energy supply – production of primary energy plus import, minus export, minus marine
bunkers,
plus – minus change in stocks
2
Estonian Energy, 2001, http://www.mkm.ee
3
Energy Agency, Lithuania, http://www.ena.lt
4
Estonia: PhD Veski, R.; Latvia: ÿnore, A., 2000; Finland: Crill, P., Hargreaves, K., Korhola, A., 2000
7
8
2
MEETING EU REQUIREMENTS
The promotion of electricity produced from RES is a high priority of the European
Community as outlined in the White Paper on “Energy for the future: renewable sources
of energy”. The White Paper has established a target of 12% of gross inland energy
consumption from RES for the Community as a whole by 2010 (compared to 6% in 1997).
Directive 2001/77/EC is a follow-up to the White Paper on renewable energy sources.
The Directive also constitutes an important part of the package of measures needed to
comply with the commitments made by the European Union (EU) under the Kyoto
Protocol (1997) on the reduction of greenhouse gas emissions.
Directive 2001/77/EC on the promotion of electricity produced from renewable

energy sources in the internal electricity market.
In order to create a Community framework, which will facilitate a significant increase in renewable
generated electricity, the Directive 2001/77/EC has been adopted. The Directive sets the indicative
target to increase RES in overall electricity consumption for the Community as a whole to 22.1% in
2010 compared to 13.9% in 1997. It concerns electricity produced from non-fossil RES such as wind,
solar, geothermal, wave, tidal, hydroelectric, biomass, landfill gas, sewage treatment gas and biogas
energies.
The main requirements of the Directive are the following:

To establish national indicative targets for electricity production from RES for the year 2010
compatible with overall targets;
According to these objectives to develop efficient and possibly simple national support schemes
considering the different nature of RES, available technologies and geographic peculiarities.
These schemes should be compatible with local electricity market principles and have
sufficiently long transition period, at least 7 years;
Provide information about the origin of “green” electricity;
Simplify the administrative procedures;
Ensure prior, undiscriminating and clearly defined access to the grid for operators producing
electricity from RES.
It is mandatory for the Member States to implement the Directive by October 2003 and for Candidate
Countries – January 2004.
According to the Directive 2001/77/EC the national indicative targets for electricity
production from RES for the Baltic States are established and have been negotiated with
the European Commission. Until 2010 the countries shall reach the following targets in
renewable electricity generation of gross electricity consumption5 : Estonia – 5.1%, Latvia
– 49.3%, Lithuania – 7.0%. In 2001, the corresponding share in Estonia was 0.1%, in
Latvia – 43.0% and in Lithuania – 3.0%. Reaching the targets seems to be realistic for all
three Baltic States, but might be more challenging for Estonia and Lithuania than for Latvia,
which already produces a large share of electricity from large-scale hydro plants. However,
the feasibility of reaching the targets depends on various aspects e.g., the availability of RES
potentials, the costs to exploit them, trends in electricity consumption in the countries.
In order to meet the overall EU renewable energy target the European Commission
acknowledges the need to also increase the use of RES for heat generation (RES-H). The
European Commission is in the process of reviewing its progress towards the overall EU
targets, including an analysis of measures also related to RES-H, in particular for promoting
an adequate supply of biomass, support through the Structural Funds (e.g., upgrade district
heating networks), and initiatives to accelerate the fulfilment of the technological potential
of three key technologies - modern biomass heating, solar heating and geothermal heat6.
5
Gross electricity consumption – production of electricity plus imports, minus exports
6
More information on the analysis of RES-H carried out within the European Climate Change Program
(ECCP)
is available at http://www.europa.eu.int/comm/environment/climat/eccp.htm
9
10
3
POLICY TARGETS IN THE THREE BALTIC STATES
In each of the Baltic States national strategies, plans and programs have been developed
with the target of reducing negative environmental impacts of the energy sector and also
to promote the use of RES.
Presently the energy policy in ESTONIA is based on the:

1) Long-term Development Plan for the Estonian Fuel and Energy Sector (1998);
2) National Environmental Strategy (1997).
The strategic objective of the Long-term Development Plan concerning renewable energy
is to achieve a higher utilisation of RES. In 2001, mainly due to an increase in the use of
wood-based fuel in district heating, the share of RES in the total primary energy supply
was about 11%7 . Further promotion of the use of RES will be undertaken by:
implementing a favourable tax policy; tax exceptions for investments in RES
utilization; implementation of resource extraction and pollution charges favouring
the use of domestic fuels; different implementation programs (e.g., national energy
efficiency target program), etc.
The National Environmental Strategy sets as a goal to orientate the energy policy towards
technological development, the use of renewable resources, a reduction in the generation
of greenhouse gases and internalisation of external costs of the energy production and
consumption in the price of energy.
In LATVIA the energy policy with regard to the use of RES and local energy sources
(e.g., peat) is set in the:
1) National Energy Program (1997);
2) Energy Policy in the Electricity Sector (2001).
The National Energy Program defines activities for the reliable supply of energy resources
in the country until the year 2020. The Program states that the energy supply has to
comply in quality and quantity with the requirements of consumers, at the lowest possible
cost and least impact on the environment. Increasing the use of local energy resources is a
key issue in the Program. However, no particular target for energy production from RES is
defined.
The main objective of Energy Policy in the Electricity Sector is promotion of the
development of power sector in accordance with balanced and sustainable development
of national economy. Promotion of the use of renewable and local energy resources as
well as coordination of environmental protection and energy production, transportation
and consumption costs are among the tools to achieve the objectives in the electricity
sector.
In LITHUANIA the policy for the use of RES for energy production is defined by the:
1) National Energy Strategy (2001);
2) National Energy Efficiency Program (2001).
The National Energy Strategy sets a goal to promote the use of RES. Following the
Strategy several Governmental orders and regulations have been issued setting measures
to achieve this goal. Among them are:
Promotion of the use of RES by administrative, economic and financial incentives;
Use of more local fuel (wood, peat, municipal waste, straw) in small co-generation
plants (CHPs);
Construction of demonstration installations producing energy from solar, wind and
biogas sources;
Establishment of quotas on use of RES for electricity production;
Setting of fixed prices (within the quota limits) and guarantying the purchase of
electricity produced from RES until 2010;
Establishment of green certificates and their introduction into the market
from 2010;
Raising public awareness and organizing educational actions.
7
Excluding energy produced from the low-temperature oil-shale retort gas (2%). In Estonia it is considered
a renewable source (equal to the landfill gas). If not utilised, it would be a significant air pollutant.
11
The National Energy Efficiency Program is updated on a regular basis and presently it is in
effect from 2001 to 2005. According to the Program, development of energy production
from RES should be focused on biomass, which has the greatest RES potential for
Lithuania. Effective collection and use of the wood residues, as well as, growing energy
forests on abandoned land and worked-out peat bogs and gravel pits should be promoted.
Additionally, burning of straw for energy production should be increased.
12
4
NATIONAL LEGISLATION
Responsibility for the drafting and implementation of energy policy in all three Baltic States
lies with the Ministry of Economy 8.
With accession to the EU, new rules for energy production and requirements for the
protection of the environment will need to be implemented. Concerning the use of RES
for energy production, the relevant national legislation has been adopted in all three
countries.
Presently, in ESTONIA the main legislative acts defining instruments for the use of RES
for energy production are the Energy Act (1995), Pollution Charge Act and Value-Added
Tax Act. Beginning July 1, 2003, the Electricity Market Act and the District Heating Act are
in force.
Various legislative measures for environmental protection and nature conservation are
taken into account when implementing policies to promote the use of RES (e.g., Planning
Act, Shores and Banks Protection Act, Protected Natural Objects Act, Heritage
Conservation Act). Presently, there are about 700 nature protection areas established in
Estonia where, for example, erection of wind turbine generators are not permitted.
In recent years the legislation in LATVIA related to energy production from RES has
undergone a number of changes. In 2001, the Law on Energy was amended particularly
with regard to the use of RES in Latvia. On the basis of this law, a number of Cabinet of
Ministers regulations (CMR) were adopted in 2002:
Requirements for CHP stations and the procedure of setting the price for the
purchase of excess electricity (CMR Nr.9). It sets a higher power purchase price if
domestic energy sources9 are utilised;
Regulations on total installation capacities in 2002 and specific capacities for each
type of electricity generation if RES are utilized (CMR Nr.28);
Regulations for the installation and dislocation of electricity production capacities if
RES are used for production of electricity (CMR Nr.29).
Environmental considerations are particularly accented in the CMR Nr.29. It is stated that
electricity production from RES can be promoted within the whole territory of Latvia,
except in areas having certain limits on the construction of hydropower plants (HPPs)
and wind turbine generators (WTGs) due to environmental or nature protection
considerations (e.g., designated nature, species or habitat protection areas; fish resource
protection zones). In 2002, according to the Law on Rivers, a list of rivers in Latvia where
construction of dams is prohibited was issued.
In LITHUANIA two legal acts are related to the use of RES for energy production: the
Law on Energy (2002) and the Law on Electricity (2000). The Law on Energy sets up the
general framework and defines the responsibilities of different institutions involved in the
promotion of the use of RES. The Law on Electricity acknowledges that the State must
encourage customers to purchase electricity produced from renewable sources and waste.
In all three Baltic States legislation regulating the use of RES for electricity production is
already in place. Legal requirements for heat production from wood and wood residues,
as well as, other biomass sources are not completed yet. New regulations have to be
adopted clearly defining obligations of the state, municipalities, private heating supply
companies for the purchase and distribution of energy from renewable and local energy
sources.
8
In Estonia – the Ministry of Economic Affairs and Communications
9
Including peat as a local energy source
13
14
5
ECONOMIC INSTRUMENTS FOR
SUPPORTING RENEWABLE ENERGY
SOURCES
In the three Baltic States several economic instruments (e.g., tariff system, obligation
schemes) for supporting energy (particularly electricity) production are applied.
Nevertheless, in order to initiate further projects on RES use for energy production
additional financial support may be required. For example, in Estonia the strategies which
define a general framework for the use of EU regional aid, emphasizes the need for
governmental support in the RES field, therefore EU Structural Funds may be considered.
Similarly, in Lithuania support for energy production from RES is proposed through the
implementation of projects financed by the EU Structural Funds. To co-finance such
projects a specific program has been established. The Single Programming Document also
defines as a goal to increase the use of local and RES aiming to decrease the amount of
imported fuel, to save funds required for the purchase of fuel, to improve environmental
conditions in the country, and to create new jobs. In order to implement these measures
several projects for the use of local and RES will be implemented.
5.1 Different support schemes for electricity production from RES have been introduced in
all three Baltic States. Regarding the purchase of electricity, Estonia and Latvia have
Electricity established feed-in tariffs. In Lithuania, purchase prices for RES produced electricity have
been approved. In Estonia VAT relief is offered, whereas in Latvia a quota system has
market been introduced.
In ESTONIA, since 1998, the main power network operator “Eesti Energia” has been
obliged to buy the electricity produced from RES (wind energy, hydropower, biomass) for
a price constituting 90% of the basic rate for residential customers if the sales volume of
alternatively produced energy was not more than 2% above the amount of electricity
consumed in the country during the previous year. This principle is no longer in effect as it
was hindering RES development in the electricity market.
According to the new Electricity Market Act, from July 1, 2003, electricity produced from
RES will receive a premium price, which constitutes 1.8 times the maximum allowable
production price of the Narva Power Plant (the major electricity producer in Estonia).
This feed-in tariff will be available for a limited period – 7 years for electricity produced
from hydropower and biomass and for 12 years for other RES, but only until 2015.
According to the Value-Added Tax Act, Estonia has 0% VAT for electricity produced by
hydro and wind power stations. This VAT relief will be valid until accession to the EU.
The main Estonian power network operator “Eesti Energia” has established an alternative way to
increase development of renewable energy production in Estonia by issuing green energy certificates for
producers and customers. “Green Energy Producer Certificate” is issued to all the generators of
alternative energy who sell their production to “Eesti Energia”.
Any company, governmental institution and residential customers having a contract with “Eesti Energia”
may purchase electricity produced from RES and receive a “Green energy customer certificate”.
The price for this green electricity depends on the amount of purchased power. Each Green energy
customer supports the Estonian Fund for Nature (ELF) through donations. ELF uses these funds to
finance projects related to nature conservation, environmental education and sustainable development10.
10
http://roheline.energia.ee/eng/ge_elf.html
15
Although positive results have already been achieved in Estonia, further steps to promote
electricity production from RES should be taken. Prior to investing large financial resources
for the development of renewable energy, the focus so far has been more on the
establishment of embedded combustion of oil-shale in order to reduce pollution in
North-eastern Estonia, and at the same time to keep energy production from oil shale at
high levels so as not to create social problems in this region which is very dependent on
the oil shale industry.
In LATVIA a feed-in tariff - double the average electricity sales tariff (AEST - 0.052
Euro/kWh) for electricity produced at small scale HPPs and WTGs was established in
1995. This tariff was successful in promoting the development of RES, but only in the small
HPP sector. Therefore, the conditions for the purchase of electricity produced from RES
have been redrafted several times in order to promote the use of other RES as well.
Currently, the Law on Energy sets mandatory requirements for the licensed electricity
distribution utility (currently the monopoly company “Latvenergo”) to purchase electricity
from:
Small scale hydropower plants (<2 MW) and wind turbine generators both
launched by January 1, 2003, for 8 years, for a price that corresponds to double
AEST. Thereafter, the purchase price will be determined by the regulator;
Energy facilities that utilize household waste or biogas (<7 MW and launched by
January 1, 2008), for 8 years, for a price that corresponds to AEST;
Wind turbine generators (erected after January 1, 2003), biomass, including wood
and peat, biogas, solar, sea tides and geothermal energy for the market price or the
price determined by the regulator.
In Latvia, to support companies producing electricity from RES, the state established an
annual quota system for electricity production from certain types of RES. A common
procedure for the purchase of electricity from CHP plants was established that takes into
consideration the capacity, the type of fuel and efficiency of the plant. The Latvian
Development Agency is preparing a study to identify ways of simplifying the support
schemes for RES electricity production. In Latvia, all power plants using RES for electricity
production have priority access to transmission and distribution systems.
In LITHUANIA, based on the Law on Electricity, a procedure for the purchase of

electricity produced from RES from plants having a total capacity of <20 MW has been
approved. The State Prices and Energy Control Commission has established fixed purchase
prices for 10 years for the produced electricity: for hydropower plants and power plants
using biomass – 0.20 LIT/kWh (0.058 Euro/kWh); wind power plants – 0.22 LIT/kWh
(0.062 Euro/kWh). These prices are higher than the purchase prices for the electricity
produced at the power plants operating on fossil fuels.
5.2 In all three Baltic States district heating is mainly the responsibility of municipalities.
Presently, only in Lithuania specific governmental policies and support schemes for the
District heating promotion of RES in heat generation for district heating have been introduced.
In ESTONIA, current legislation and strategies do not foresee any measures to encourage
the use of RES in district heating except for the low-level VAT. Instead of the standard
18% VAT, RES fuels and district heating services are charged only by 5% VAT until the
2007. In Estonia, according to the Pollution Charge Act, combustion of biofuel, peat and
waste is exempted from the CO2 tax, which also promotes the use of RES for
energy production.
In LATVIA, current legislation does not foresee promotion of the purchase of heat energy
produced from RES. Although, only electricity production in CHP plants using local energy
sources has a higher power purchase price, this nevertheless also has a positive influence
on heat energy production. To date only a few state investments have been earmarked for
projects that increase the efficiency of the heat supply system and use biomass (mainly
wood-based fuels) in boiler houses. For example, in 2002, within the frame of the State
investments program, 19 projects were carried out with total state support of about 1.2
million LVL (2.1 million Euro). In 2003, due to lack of financial resources, state support will
be granted only for 13 new projects.
16
In Lithuania, the Law on Thermal Economy (2003) regulates the purchase of thermal
energy produced from RES. According to this law, the State and municipalities should
promote the purchase of thermal energy produced from RES as an activity that serves
public interest. The State Prices and Energy Control Committee must ensure that thermal
power from RES is purchased. The purchase price for heat generation from RES is set
separately in every case.
17
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6
USE OF DIFFERENT RENEWABLE ENERGY
SOURCES IN THE BALTIC STATES
Currently, different types of RES for energy production are used in Estonia, Latvia and
Lithuania. The use of wood-based fuels, hydro and wind power has the longest tradition
in the Baltic States. In addition, in all three countries there have been developments in
energy generation from biodegradable waste and straw.
Although peat is not commonly considered a RES, it is a local energy resource available in
all three Baltic States. Several experts regard peat as a “slowly renewable energy source”
and therefore the use of peat for energy production is also included in this study.
6.1
Wind turbine generators in Virtsu, Estonia
Wind energy
Resource Wind in general is an inexhaustible energy source. However, it is not evenly distributed.
Wind, containing energy, has a cyclonic origin. Born over the Atlantic Ocean, these
available frequent cyclones move over Scandinavia, the Baltic States and Finland to North-west of
Russia. Wind as a resource is concentrated in the archipelago of Estonia, along the coastal
areas of the Baltic Sea and the eastern shore of the Gulf of Riga. Inland areas of the Baltic
States are generally not acceptable for wind energy generation mostly because of the
extensive forest cover.
Wind conditions are well investigated in the Baltic States. Regular measurements of wind
speed are performed by national meteorological institutes/agencies. Average wind speed at
10 m above ground level range from 5-6 m/s in areas found most suitable for wind energy
generation in all three Baltic States. Based on measurements undertaken the potential for
energy output has been estimated (Table 6.1).
Table 6.1 Wind resource and its potential for energy production in Estonia, Latvia and Lithuania
Areas suitable for wind Potential for wind

energy production energy production, GWh/y
Archipelago, west coast 924
ESTONIA (2 km wide stripe), north coast (20 km)
West coast, eastern part of the Gulf of Riga 1000
LATVIA (nearby Aina˝i)
Coastline (98 km in total), inland 200*
LITHUANIA (few sites about 100 km from the sea)** 600**
Source: Estonia: Kull, A.; Tomson, T., et. al., 2002; Latvia: Program for use of renewable energy sources,
2000; Lithuania: * The National energy efficiency program 2001-2005; ** Measurements of Royal RISO
Laboratory for the project “Wind Energy Development in the Baltic States”
19
Wind is considered a fluctuating energy source, as wind power suitable for energy
production is not constant and is unpredictable. For example, during a long period (44.5%
of the time), energy production by Estonian wind turbine generators (WTGs) does not
exceed half of their designed capacity. The situation in Latvia and Lithuania is similar. This
indicates that wind power can be considered an auxiliary source of energy. In order to
provide a continuous energy supply, back-up energy production from other sources has to
be considered as well.
Historical All three Baltic States have long traditions of wind energy utilization. Historically windmills
were widely used for milling grain. Nevertheless, these windmills lost their function due to
overview electrification of farm works. Before the World War II wind turbines were used as a local
energy source in farmsteads. Moreover, in Latvia WTGs were produced by the State
company “VEF” and other small enterprises.
During the Soviet era wind energy production did not develop due to utilization of cheap
energy from fossil fuels. At the end of the 1980s and the beginning of the 1990s the use of
wind energy was renewed in Estonia and Latvia. A large wind energy project was tested in
Estonia (Vätta peninsula, Saaremaa) where Soviet-made WTGs with a total capacity of 346
kW were erected in order to produce heat in a local collective farm. Due to the low
quality of these WTGs, this wind generator farm soon ceased activity. In 1991, the first
WTG (20 kW) started to operate in Ozolaine, Latvia. In the same year the company
“Vòjas” designed the first wind plant in Lithuania, which was built in the Prienai district.
Later, several power facilities (about 60 kW each) were designed and installed in Kaunas
and elsewhere. One power plant designed by the Klaipòda Technical University was
erected in Klaipòda district. Not all these plants worked successfully; a series of technical
problems have arisen related to efficiency and operational reliability.
Present In 1995-1997, the first modern WTGs for electricity production were erected in the Baltic
States. Furthermore, many new WTGs started operation in 2002. Currently, there are 5
situation units connected to the power grid in Estonia with a total capacity of 2180 kW and about
40 units in Latvia with a total capacity of 27150 kW (Table 6.2). Presently, there are no
commercial wind farms in Lithuania. Some small-scale WTGs are erected, but none of
them is operating commercially.
Wind turbine generators in Aina˝i, Latvia
20
Table 6.2 Currently operating modern WTGs in Estonia and Latvia
Site Launched WTG Capacity, kW

ESTONIA
Hiiumaa, Tahkuna peninsula 1997 Genwin 150
Saaremaa, Sõrve peninsula 2002 Vestas V-27 230
Continental Estonia, Virtsu peninsula 2002 Enercon E-40 3 x 600
LATVIA
Aina˝i, coastal zone, eastern part 1995 2 x 600
of the Gulf of Riga
“Kursa” * 1998 150
“Impakt” * 2000 1000
“VËja Parks” * 2002 33 x 600
“KruzËni” * 2002 750
“GrÏnvalti” * 2002 750
“BK EnerÂija” * 2002 1500
“Baltnorvent” * 2002 2000
* Located in the coastal area nearby Liep‚ja and Grobia
Source: Estonia: Estonian Wind Power Association; Latvia: Latvian Development Agency, Energy Department;
"Latvenergo"
The trend in the development of wind energy capacity and electricity generation in Latvia
during the last decade is presented in Figure 6.1. A sharp rise in electricity production
from wind energy was observed in 2002, which can be explained by the establishment of
favourable economic conditions for wind energy development.
Figure 6.1 WTGs capacity and electricity production during 1990-2002 in Latvia
30 12
25 10
20 8
MW 15 6 GWh
10 4
5 2
0 0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Capacity, MW
Source: Central Statistical Bureau of Latvia
Electricity production from wind energy has grown considerable during recent years,
however, its current share of gross electricity consumption in Estonia is 0.1% (8 GWh11)
and in Latvia 0.2%12. In Lithuania, although currently electricity production from wind
energy has marginal importance, utilisation of this potential will be considered in the
future.
11
Wind and hydro together. Estonian Energy, 2001, http://www.mkm.ee
12
Central Statistical Bureau of Latvia
21
Future Electricity production from wind energy is steadily developing in all three Baltic States.
Several new projects for the construction of wind parks are under preparation.
perspectives In Estonia, a large number of applications have been received to connect to the grid of the
largest power system “Eesti Energia” (examples are presented in Table 6.3). All projects
have been publicly discussed in local communities. Taking into account the
current trends, it is anticipated that in Estonia ~50 new WTGs will be erected by 2010
with a total capacity 50–100 MW (compared to about 2 MW in 2002). Estimations indicate
a good potential for wind energy development, nevertheless the potential can be realized
only if economic incentives are sufficient.
Table 6.3 New projects for WTGs construction in Estonia
Project/ investor Site Capacity, kW
“Pakri Wind Park”* (EU support) Pakri peninsula 8 x 2500

“Meritreid”* Sõrve peninsula 230
“Meritreid”* Coast of the Lake Peipsi 150
“Roheline Ring”** Virtsu peninsula 5 units
(including one 1.8 MW unit)
“Renewable Energy Group”** near Rõuste
Virtsu 2 units
(including one 1.5 MW unit)
“Eesti Energia”** Island of Ruhnu 3 units
(including one 30 kW unit)
“Kemo elekter”** Rohuküla 1 x 900
* Building license ** Project stage

Source: Estonian Wind Power Association
According to estimates, in Latvia the optimum amount of electricity produced from WTGs
could be about 300 GWh (compared to 11 GWh in 2002)13. Presently, only a few projects
are in the preparation stage (for example, “Baltic Wind Power Corporation” with a
capacity of 100 MW).
In Lithuania there are several project proposals for the construction of wind farms as
presented below.
Large-scale wind farm in western part of Lithuania

According to Baltic News Service (November 25, 2002), a German and Lithuanian consortium (“Vejo
Jega” and “WIP Corp Baltic States”) plans to build one large-scale wind farm (52 MW turbines) as a
pilot plant by the end of 2003, investing 11 million Euro.
Wind turbines between G a r g Ï d a i and VòÏaiãai

“NEG Micon” is planning to implement a 20 million Euro project of 10 wind turbines with total
capacity of 15 MW between GargÏdai and V òÏaiãai (western part of Lithuania). The project is in an
initial stage (no Enviromental Impact Assessment (EIA) and technical design have been carried out).
Kai¯iadoriai Bishopric has permission for the construction of one WTG (1.3 MW) “NORDEX” N-60
but the construction works have not started yet.
Rietavas, Priekulò and ·ilalò

The project is in an initial stage (no EIA and technical design have been carried out).
Market Successful implementation of projects and the promotion of electricity generation from
wind energy is closely related to economic factors (e.g., investment costs, electricity
investments purchase price, favourable tax conditions). Estimated investment costs and current
and price purchase prices in Estonia, Latvia and Lithuania are presented in Table 6.4.
13
Program for use of renewable energy sources, 2000
22
Table 6.4 Investment costs and prices for electricity production from wind energy
ESTONIA LATVIA LITHUANIA

Estimated investment ~1000 ~1000 ~1000
costs, Euro/kW
Current purchase price*, 0.051** 0.104 0.062
Euro/kWh (from 01.07.2003) (double average
sales tariff) ***
* Calculated according to the current legislation in each country
** 0% VAT
*** for WTGs being in operation by January 1, 2003
Source: Estonia: Estonian Wind Power Association; Latvia: Latvian Development Agency, Energy Department;
Lithuania: Wind energy the facts, 1999
Investment costs of 1000 Euro/kW are estimated in the three Baltic States. The estimated
payback period of 4-10 years depends on the purchase price and wind conditions. In some
cases the investment costs can be higher. For example, the Estonian power system “Eesti
Energia” is mainly based on two big oil-shale thermal power plants (1400 and 1600 MW)
near Narva in northeast Estonia. High voltage (330 kV) lines connect the Narva area with
Tallinn, Riga, Pskov and St. Petersburg. In western Estonia main grids (110 kV) are rare,
except on the Pakri and Virtsu peninsulas, and for the connection of wind parks additional
high voltage lines must be built. For wind park builders this requirement practically dou-
bles the investment cost for wind energy.
Development of wind energy is strongly dependent on the electricity purchase price and
national policy targets for RES.
In Estonia, according to the Law on Electricity, from July 1, 2003, the new power purchase
price is calculated at 0.051 Euro/kWh (compared to 0.06 Euro/kWh previously).
Developers of wind energy assume this cost as not viable for projects and therefore many
new projects under preparation have been “frozen” due to the uncertainties.
In Latvia, the construction of WTGs was previously encouraged by a double average sales
tariff. According to the current legislation for new projects (after January 1, 2003), a quota
system is applied. The purchase price for produced electricity is set by the regulator, if a
share of the quota for wind energy is obtained. In other cases the electricity purchase
price is determined by competition.
In Lithuania, the purchase price is fixed by the State Prices and Energy Control Committee
for 10 years. The price (0.062 Euro/kWh) offered is barely sufficient to be profitable. At a
higher average wind speed (~6 m/s) the purchase price is adequate. Suitable sites can be
found in the coastal area and the Curonian lagoon.
The attitude of society towards the promotion of wind energy production has been more
Public opinion positive than negative in all three Baltic States. More attention to wind energy generation is
paid in Estonia, where due to their attractive appearance, WTGs are often featured on TV
and in other media. In addition, the Estonian Wind Power Association consults people and
mediates with possible investors. The main concerns are related to the potential increase
in the price of electricity for consumers and potential negative impacts to the landscape
and nature.
23
The key positive and negative aspects to be considered for wind energy production in the
Baltic States are summarized below.
Positive aspects Negative aspects

“Green energy”, no emissions Disturbance of migrating birds
Non-exhaustible resource More expensive technologies than for
electricity production from conventional
No fuel costs fuels
Low operational costs Can increase electricity price for customers
Creation of new jobs Not stable, unpredictable, therefore wind
energy can only have an auxiliary function
High efficiency of electricity production Uneven distribution
Conclusions Electricity production using wind energy is currently developing in all three Baltic States.
Despite the moderate potential of this natural resource, which is available mostly in coastal
areas, wind energy could contribute to the local energy supply in the future. The use of
wind energy will become more important when countries will be required to introduce an
energy tax (CO2 emission tax). Furthermore, promotion of the use of wind energy
will contribute to meeting the requirements of Directive 2001/77/EC.
Although having low environmental impacts (no greenhouse gas emissions), wind farms
may disturb migrating birds, particularly, if WTGs are established along the coastline. In all
three Baltic States large numbers of protected nature areas have been established along
the coastline. In Lithuania 2/3 of the coastline is protected or reserved for recreation use,
and therefore construction of wind farms is not allowed. Presently, all existing WTGs in
Estonia are operating in nature protection areas.
Other concerns related to shading, blinking, as well as the disturbance of the visual
landscape only impact relatively small areas locally. Nevertheless, in any project proposal
for use of alternative sources for energy production, the landscape, Natura 2000 sites,
migratory birds and other aspects have to be taken into account.
In order to promote electricity production from wind energy, all relevant political,
legislative and economic preconditions (e.g., clear power purchase conditions and
agreements, access to the grid, construction of new lines) need to be ensured. Permitting
procedures for the development of wind farms need to be fair and transparent. For the
investigation of new sites suitable for wind energy generation state supported programs
should be established. Also the level of awareness of local project managers, officials and
the local community needs to be increased.
24
6.2
Hydropower plant “RÏga” on the Daugava River, Latvia
Hydropower
Resource All three Baltic States have sufficient water resources: inland waters cover 6.3% of
Estonia, 3.9% of Latvia and 4.0% of Lithuania. Only rivers are considered as sources of
available energy production, whereas size and discharge mainly determine their suitability for the
construction of hydropower plants (HPPs). All three Baltic States are rich in rivers (Table
6.5). However, only a few (e.g., Narva, Daugava, Nemunas) are suitable for energy
production on a large-scale (capacity >10 MW). Other rivers are potentially more suitable
for construction of small-scale HPPs (capacity <10 MW).
Table 6.5 Hydropower resource in Estonia, Latvia and Lithuania
Parameters ESTONIA LATVIA LITHUANIA
Total number of rivers 525 880 758

over 10 km long
Three longest rivers, Vöhandu (162) Gauja (452) Nemunas (475)
km inside country Pärnu (144) Daugava (352) Neris (234)
Pöltsamaa (135) Venta (178) Venta (161)
The highest outflow, Narva* Daugava Nemunas
km3/year (12.53) (17.88)** (22.17)
* The Narva River is a frontier river between Estonia and Russia. Its hydro potential is utilized only on the
Russian side
** Yearly average outflow at the “PÓavias” HPP
Source: Estonia: Raesaar, P., 1995; Latvia: Encyclopaedia, Latvian Nature, 1998; Program for use of renewable
energy sources, 2000; Lithuania: Burneikis, J., et al., 2001
Estimates from the hydropower resources available indicate high total theoretical
capability of hydro energy potentials in the Baltic States. However, technically and
economically exploitable capability, taking into account environmental requirements, has to
be considered as well. For example, according to Lithuanian Hydropower Association, the
technically exploitable capability of electricity production from small-scale HPPs is roughly
5 times higher if compared to economically exploitable capability (185 GWh/year). Such
estimates also take into account environmental and nature restrictions in Lithuania.
Electricity production in HPPs, particularly small-scale, is very dependent on the amount

of precipitation per year. During dry seasons, when the water levels and discharge rates in
rivers are lower, electricity production is reduced. With very low precipitation conditions
the constraints posed by the possible drying out of smaller rivers has to be considered.
25
Historical There are long traditions of using hydropower for energy production in all three Baltic
States. The first large-scale HPPs were erected on the Daugava River in Latvia in 1936
overview (“∆egums”) and in 1966 (“PÓavias”). These plants are still in continuous operation.
During 2002, reconstruction works were carried out to improve their efficiency.
Between 1920 and 1940, approximately 700 water mills were operating in Estonia, up to
921 in Latvia and 309 in Lithuania. For example, in Estonia in the middle of 20th century,
the energy output from hydropower was roughly one third of the gross electricity
consumption. In the period from 1954 until 1977 operation of all small scale HPPs in Latvia
and Estonia was stopped because of the availability of cheap fossil energy resources in the
former Soviet Union. In Lithuania, it was also decided to stop electricity production from
small-scale HPPs because electricity from large power plants was easier to access and the
operation of small-scale HPPs was inefficient14. Electricity production in the Ignalina nuclear
power plant also did not promote the development of RES.
Since the beginning of 90ties, the number of small-scale HPPs has grown in all three Baltic
States. Many of them have been installed by using remnants of old dams, canals and
artificial water reservoirs.
Present Nowadays electricity from hydroenergy is produced both by large-scale, as well as, small-
scale HPPs. An overview on currently operating HPPs is presented in Tables 6.6 and 6.7.
situation Production of hydro energy in Estonia is undertaken mainly by the companies
Table 6.6 Currently operating large-scale HPPs in Estonia, Latvia and Lithuania in 2001

Large-scale HPPs 0 3 1
(>10 MW)
Examples: - “∆egums” on the Kaunas HPP on the
Daugava River Nemunas River
“PÓavias” on the
Daugava River
“RÏga” on the
Daugava River
Total capacity of large- - 1535 100

scale HPPs, MW
Total output, GWh/year - 2796 375
Source: Latvia: Latvian Development Agency, Energy Department; “Latvenergo”; Lithuania: Lithuanian Energy
Institute; Energy Agency; Burneikis, J., et al., 2001
Table 6.7 Currently operating small-scale HPPs in Estonia, Latvia and Lithuania in 2001

Small-scale HPPs <20 104 41
(<10 MW) (150 in 2002)
Examples: “Linnamäe HPP on SpridzËnu HPP on Kavarsko HPP on
the Jägala River the Aiviekste River the ÿventoji River
(1200 kW) (1200 kW) (1500 kW)
Kamari HPP on the CÏri¯u HPP on the Pastrò vio HPP on
Põltsamaa River Tartaks River (1200 kW) the Strò va River

(200 kW) Aiviekstes HPP on the (320 kW)
Saesaare HPP on the Aiviekste River
Ahja River (200 kW) (1000 kW)
Total capacity of small 1.9* 14.7 15.0

scale HPPs, MW
Total output, GWh/year 8* 36.9 41
* Wind and hydropower together
Source: Estonia: Estonian Energy, 2001, http://www.mkm.ee; Latvia: Latvian Development Agency,
Energy Department; “Latvenergo”; Lithuania: Lithuanian Energy Institute; Energy Agency; Burneikis, J., et al.,
14
Burneikis, J., Jablonskis, J., 1998
26
“Generaator”, “Generaator E&K”, “Eesti Veejõu”, “Eesti Energia” etc., but also by a
number of municipalities and private enterprises. In Latvia, “Latvenergo” owns the HPPs
on the Daugava River cascade. Small-scale HPPs are mostly privately owned. In Lithuania,
the main company involved in the development of hydro energy is the company “Achemos
hidrostotys”.
Kavarsko hydropower plant on the ÿventoji River, Lithuania
The trend in the development of generation capacity and electricity generated from small-
scale HPPs in Latvia for last decade is presented in Figure 6.2. Capacity of small-scale
HPPs has grown continuously during last 5 years due to favourable economic incentives
for the development of this sector. Generation of electricity depends on meteorological
conditions. In 2002, despite an increase in installed capacity, the electricity production
from small-scale HPPs decreased due to low precipitation rates.
Figure 6.2 Small-scale HPP – capacity and electricity production for 1990-2002 in Latvia
30 40
35
25
30
20
25
MW 15 20 GWh
15
10
10
5
5
0 0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Capacity, MW
Source: Central Statistical bureau of Latvia
A comparison of the three Baltic States reveals that the use of hydro resources for
electricity production is most important for Latvia, which has the highest share of hydro
energy in the total primary energy supply/gross electricity consumption (Table 6.8).
27
Table 6.8 Share of hydro energy in the total primary energy supply/gross electricity consumption in 2001
Share of hydro energy: ESTONIA LATVIA LITHUANIA

in the total primary 0.01* 5.6 0.3
energy supply, %
from all HPPs of gross 0.1* 39.0 3.0
electricity consumption, %
from small-scale HPPs of 0.1* 0.5 0.4
gross electricity
consumption, %
* Wind and hydropower together
Source: Estonia: Energy balance 2001; Statistical office of Estonia; Latvia: Central Statistical bureau of Latvia;
Lithuania: Lithuanian Energy Institute; Lithuanian Hydropower Association
Future In Estonia, there are currently no plans to build a power plant on the Narva River. There
are several projects proposals to construct small-scale HPPs (capacity about 1 MW) on
perspectives small rivers with a total potential output of 21.9 GWh/year. Examples of potential projects
are presented below.
“Sindi” HPP
The HPP is to be built on the Pärnu River (capacity 1500 kW, output 8.3 GWh/year), owner - Sindi
municipality, Toleram Group.
“Jägala-Joa” HPP
The HPP is to be built on the Jägala River (capacity 1500 kW, output 7.8 GWh/year),
owner - Jõelähtme municipality.
In Latvia, there is still an unused potential for electricity production on the Daugava River.
It is possible that a discussion about the construction of two large-scale HPPs - JËkabpils
HPP (~30 MW) and Daugavpils HPP (~100 MW) - could be started in several years.
Investigations are currently ongoing. It is expected that the construction of new small-scale
HPPs will slow down mostly due to economic reasons and environmental restrictions.
Only 3 new small-scale HPPs are to be constructed in 2003.
In Lithuania, additional opportunities to utilize the potential of the Nemunas and Neris
Rivers are being considered. Presently, there are proposals under discussion for the
construction of two large-scale HPPs – one on the Nemunas River and the second on the
Neris River.
Large-scale HPP on the Nemunas River

The project is evaluated as being reasonable from economic, social and environmental aspects and an
environmental impact assessment has been carried out. The exact date of construction is not set. The
planned installed capacity will be 100 MW.
Large-scale HPP on the Neris River

There are many arguments against implementation of this project. The Neris River is the only large
river in Lithuania without a dam. The proposed new dam will block upstream fish migration. The
benefits derived from the HPP will not cover the cost of damages caused to nature. Therefore, it
seems that in the near future this project will not be implemented.
Construction of new HPPs especially on small rivers is a source of environmental concern

in Latvia and Lithuania. In both countries the Ministry of Environment has designated rivers
on which construction of the dams and HPPs is prohibited. For example, due to existing
environmental restrictions in Lithuania, the economically and environmentally justifiable
small-scale hydropower potential has been diminished from a previous level of 15% to
currently about 5%.
28
Market Estimated investment costs and current hydro energy purchase prices in Estonia, Latvia
and Lithuania are presented in Table 6.9.
investments
and price
Table 6.9 Investment costs and prices for electricity production from hydro energy

Estimated investment 1300-3500 1000-5000 1100-3000
costs, Euro/kW
Current purchase price*, 0.051 0.104 0.058
Euro/kWh 0.060 (double average
(until 01.07.03) tariff**)
* Calculated according to the current legislation in each country

** For small-scale HPP constructed by January 1, 2003
Source: Estonia: Report of the Renewable Energy Commission, 2000; Latvia: Latvian Development Agency,
Energy Department; Lithuania: Burneikis, J., et al., 2001
Estimated investment costs for electricity production from hydropower range from 1000
to 5000 Euro/kW in the Baltic States depending on initial conditions (e.g., if a dam already
exists, connections to the power net, etc.). It has been estimated15 that main investment
costs for the construction of dam-based HPPs are for the establishment of the power unit
(35%), dam construction (35%) and other construction costs (15%), but for a derivation-
based HPPs – construction of the derivation canal (32%), establishment of the power unit
(24%), dam construction (12%) and other construction costs (9%). The payback periods
have been estimated in Lithuania (5-10 years)16 and Estonia (4-6 years)17.
In Estonia, the power purchase price has been changed since July 1, 2003, and is calculated
as 0.051 Euro/kWh.
In Latvia, the double average tariff (0.104 Euro/kWh) was a good incentive for energy
producers to invest in small-scale HPPs leading to rapid development of this sector.
However, power purchase conditions were recently revised. In order to promote other
types of RES, new support schemes were introduced (a quota system and definition of the
purchase price of electricity) and beginning January 1, 2003, no higher purchase tariffs for
newly constructed HPPs will be applied.
In Lithuania, for the last 10 years small HPPs have been developed mainly on the existing
dams. In this case the current power purchase price (about 0.06 Euro/kWh) can be
considered attractive for investors. If a new dam must be constructed then the purchase
price would hardly cover the initial investment costs.
The attitude of society towards an increase in the use of hydropower energy differs widely
Public opinion between Estonia, Latvia and Lithuania. In Estonia, public opinion is supportive of
hydropower. Electricity production from hydro energy is portrayed in a positive light on
TV. Popular films about the rebuilding of HPPs have been shown. Presently, NGOs are not
actively expressing their views concerning the use of hydro energy resources in Estonia.
In contrast, in Latvia there is quite a strong opposition to the construction of new HPPs,
mainly due to environmental concerns. Recently, several articles critical of small-scale HPPs
have been published in the press. Furthermore, the World Wildlife Fund (WWF) Latvia and
the Association of Anglers have prepared a study on the environmental impacts caused by
small-scale HPPs. Stronger measures to reduce negative impacts and more stringent
control and compensation mechanisms for resulting adverse impacts will be introduced.
In order to strengthen control over the implementation of environmental requirements in
small-scale HPPs, the Latvian Environmental State Inspectorate in April 2003 adopted a
new methodology for monitoring these plants.
15,17
Report of the Renewable Energy Commission, 2000
16
Burneikis, J., Jablonskis, J., 1998
29
In Lithuania, promotion of the use of hydro energy is supported by the Lithuanian Society
of Hydro Energy. Most public opposition is directed against the construction of new HPPs
on natural rivers. This position is supported by the Lithuanian Green Movement since elec-
tricity production from HPPs will cover only 1-2% of total energy demand in Lithuania,
but environmental impacts will be considerable.
The hydro energy sector is also the most controversial sector amongst experts. The key
positive and negative aspects of hydro energy are listed below.

No emissions Impacts on nature:
Disturbance of fish migration
Change of biodiversity
Loss of habitats and breeding sites due
to flooding
Damage to natural banks of rivers
Damage to certain tree species due to
fluctuations in water level

Loss of land area due to flooding
Cheap local energy source High investment costs for technologies
Low maintenance and service costs
Creation of new jobs
High efficiency if precipitation Fluctuations in through-flow of water due
conditions are favourable to variations in precipitation. In extreme
cases the dry-up of rivers is possible
Conclusions The Baltic States have a long tradition and experience in the use of hydro resources for
energy production. However, various aspects (positive and negative) have to be evaluated
and taken into account in further development. First of all, hydro energy production is
emission free, utilizes a cheap local energy source and has a high efficiency rate, if
precipitation conditions are favourable. Electricity production from hydro resources
supports fulfilment of the targets set by Directive 2001/77/EC. For Latvia, hydropower
contributes significantly to the electricity supply thus decreasing dependence on
imported fuel.
However, the main concern regarding electricity production from hydro resources is
related to the various negative impacts on the environment and nature, particularly with
regard to fish resources. Fish ladders for fish migration are constructed only on a few
HPPs, they are selective and only some of them are really effective.
Construction of new HPPs should be very carefully evaluated taking into account
economic, social and environmental impacts. The priority for further development should
be put on the reconstruction of already existing HPPs. Combining of electricity production
with recreation/tourist activities or reconstruction of historical water mills should be
promoted by national or EU programs. It is crucial to raise environmental awareness
amongst HPPs operators and project developers, in order to decrease negative impacts
on the environment and not to discredit the hydropower sector.
30
6.3
Prepared firewood, Salaspils, Latvia
Wood-based fuels
Resource As all three Baltic States are rich in forests (31-49% forest cover) they have a high
potential for energy production from wood-based fuels - firewood, wood by-products
available (e.g., wood chips, pellets, granules, briquettes), forest residues, waste wood (including
sawdust, flabs, edgings, etc.).
Table 6.10 Forest resources and utilization in Estonia, Latvia and Lithuania in 2001
Area covered by forests, 2 3 2

million ha (49% of territory) (44% of territory) (31% of territory)
Areas most rich in Lääne-Viru, Ida-Viru, Ventspils, Talsi, Varò na, Ignalina
forests Võru counties Aizkraukle districts ÿven‡ionys,
Molò tai districts
Total stock of wood, 400 544 378
million m3
Net annual increment 12-13 13 13
of the wood biomass,
million m3/year*
Felling volume of wood, up to 13** 11 4

million m3
Production of wood-based 3264 9106 not available
fuels, thousand m3
* Gross annual increment excluding consideration of natural loss of trees and restrictions to forest
management for the purposes of nature protection
** Estimated from different sources
Source: Estonia: Estonian Energy 2001; Statistical office of Estonia; Latvia: The forest policy of Latvia, 2002;
Program for use of renewable energy sources, 2000; Central Statistical Bureau of Latvia; Lithuania: General
Forest Enterprise, Ministry of Environment
Forest resources and their utilization in the Baltic States are presented in Table 6.10. The
recommended felling volume has already been exceeded in Estonia. Currently, in Lithuania
the volume of felled timber is less compared to Estonia and Latvia. Experts foresee that
felling amounts will increase by up to 7 million m3 in the next 20 to 30 years18.
The wood processing industry is well developed in all three Baltic States. Waste wood
derived from wood processing processes can be effectively collected. For example, in
Estonia about 95% of waste wood is used for energy production.
18
General Forest Enterprise, Ministry of Environment, www.gmu.lt
31
Different wood by-products are produced in all three countries. For example, in Estonia
several enterprises are producing wood chips, wood briquettes (20000 tonnes in 2000)
and pellets (100000 tonnes in 2002). The market for wood chips, briquettes and pellets is
well developed and operates on a combination of contracts and demand-supply basis, with
the price being set by the market. The lower price in the Baltic States makes the export of
wood products attractive. Wood products from Estonia and Latvia are an important export
item to Sweden and Denmark. Similarly, in Latvia the largest part of wood products is
exported to Sweden. As exports increase, local wood fuel users are concerned that they
cannot offer as high a price.
Production of wood briquettes, "Valstras", Ukmergò, Lithuania
Due to the extensive use of firewood resources in all three Baltic States, alternative
options have been considered, such as using of brushwood and cultivating fast-growing
energy trees in areas not suitable for agriculture. The biomass reserves of brushwood
have not yet been thoroughly investigated. A few experiments on growing energy forests
were performed in Estonia in 1996 with moderate results and therefore, the earlier
enthusiasm is subsided, although investigations in this field are continuing.
The potential for energy production from forest residues is still not efficiently utilized in
all three countries. For example, in Estonia the use of forest residues accounts for only
10% of energy production from wood-based fuels. Among the reasons for this are that
residues are picked up manually due to small area of clear-cuts, as defined by
environmental regulations. Thus the use of heavy equipment is not suitable for the
pick-up of residues. It is estimated that about 1 million m3 of available forest residue
is not utilized in Lithuania. In Latvia, forest residue resources are also significant, although
estimates vary considerably.
Historical The use of wood-based fuels for heat production in private households and farms has a
long tradition as an easily accessible local energy source. During the Soviet times, mainly
overview due to the expanded use of cheap fossil fuels, the use of wood in heat production declined
year by year. After restoration of independence in 1991, in all three Baltic States fuel
prices changed markedly and the utilization of local fuel in the energy sector again became
relevant. In Estonia, much attention was paid to increased efficiency and wider utilization
of wood and peat. During the period 1990-1995 renovation of district heating systems and
conversion of boilers to burn fuel wood was supported by loans of the World Bank,
European Bank for Reconstruction and Development and Swedish Energy Agency. The
share of wood in energy production started to increase. Additionally, in Latvia introduction
of modern technologies for heat production from wood-based fuels was supported
through international programs financed by the governments of the Scandinavian countries.
The first wood chip fuelled boiler installation projects were implemented in M‚lpils
(financed by Denmark) and in Balvi (financed by Sweden) in 1993.
32
Present In the Baltic States wood-based fuels are used for heat generation in centralized heating
systems having boiler houses utilizing mainly firewood and waste wood. Another large
situation group of users are households that use mainly firewood. So far, the use of wood-based
fuels for energy production in combined heat and power (CHP) plants has been limited
mostly due to an unbalanced demand for heat during the year. An overview on energy
production from wood-based fuels in boiler houses and consumption in households is
presented in Table 6.11.
Table 6.11 Production of energy from wood-based fuel in the Baltic States in 2001

Consumption of heat in 13639 30519 20517
in households, TJ
Capacity of wood 747 >270 251
fired boiler houses, MW
Production of heat in 5976 9313 2484
boiler houses, TJ
Total production of heat 21697 52669 28005
from wood-based fuels, TJ
Share of energy produced 10.9 28.6 8.0
from wood-based fuels
of the total primary
energy supply, %
Source: Estonia: Energy balance 2001; Statistical office of Estonia; Latvia: Central Statistical bureau of
Latvia; Lithuania: Lithuanian Energy Institute
Energy production from wood-based fuels has a high share in the total primary energy
supply: 10.9% in Estonia, 28.6% in Latvia and 8.0% in Lithuania. However, these high
numbers are mainly due to use of wood-based fuels for heating in households (Table 6.11).
Wood-based fuels are used widely by households, as well as, in small-scale boiler houses
especially in regions where access to natural gas systems is not available.
Within three Baltic States the highest number of wood-fired boilers currently can be found
in Estonia (ca 700) due to substantial governmental support in early 1990s. In Estonia,
wood fuel fired boilers are designed at the Tallinn Technical University and several enter-
prises are involved in their production. However, presently the installed boiler houses are
facing a shortage of the wood fuel. Thus, for example, forest residues and timber waste
from the mainland are transported to the Saaremaa Island (Kuressaare boiler plant) for
heat generation.
In order to reduce consumption of firewood, utilization of other wood-based fuels (e.g.,

forest residues, waste wood) is advisable. Two examples of relevant projects in Lithuania
are presented below.
Wood boilers in Molò tai schools

The education department of Molò tai municipality obtained a commercial bank loan and replaced
coal-based boilers in schools to wood-based fuel boilers (firewood and sawdust) for heat generation.
The total installed capacity of the boilers is about 2.5 MW.
“Paj˙rio mediena”
The wood treatment company “Paj˙rio mediena” reconstructed its existing boiler house and installed
new equipment for the production of heat and electricity from forest residues. Investments were
made using the company’s financial sources. The installed capacity for heat production is 27.5 MW and
1.5 MW for electricity. Heat is supplied to the city of Klaipeda for 0.05 LIT/kWh (0.015 Euro/kWh).
The purchase price for electricity has not been established yet.
33
Future In general energy production from wood-based fuels has a good potential in all three Baltic
States. Extended use of wood-based fuels for energy production will largely depend on
perspectives support schemes established by the government.
It is envisaged that the full potential can be realized best by increasing the use of forest
residues, waste wood and brushwood. Further harvesting of wood for energy production
cannot be considered sustainable. The efficiency of the utilization offorest residues, waste
wood and brushwood can be improved by increasing the efficiency of the collection
process. Furthermore, the competitiveness of the market price of wood-based fuels and
transportation costs are factors that will influence the use of wood-based fuels. If the
market price is too low and transportation costs are too high then, for example, forest
residues are mainly left lying on the ground or burned in forest.
Another potential source of wood-based fuel is from energy crops in the form of fast
growing trees in areas not suitable for agriculture. For example, in Lithuania about 30000
ha of land are not suitable for agriculture. Also, there are about 20000 ha of peat bogs
where extraction will soon be completed. However, further investigations and test projects
still need to be carried out.
Market Wood-based fuels are mostly used for heat production in boiler houses and households.
Energy from wood-based fuels in combined heat and power plants is generated only in a
investments few plants. Investment costs of 172-300 Euro/kW for power plants using wood-based fuels
have been estimated. The pay back time is estimated at about 2-3 years19.
and price Investment costs and the payback period depend on the technologies used.
Although the purchase price for electricity generation from wood-based fuels in CHP
plants is established in Latvia it has a rather abstract meaning as, currently, there are no
CHP plants that operate on wood-based fuels. In Lithuania, the purchase price for
electricity and heat generation is established on a project basis by the State Prices and
Energy Control Committee (Table 6.12).
Table 6.12 Prices for energy production from wood-based fuels in the Baltic States

Current purchase price As for 0.054-0.064*, Set on a project
for electricity/heat conventional fuel depending on basis by the State
of CHP, Euro/kWh installed capacity Prices and Energy
(for electricity) Control Committee
(for electricity
and heat)
* Calculated according to the current legislation
There is neither strong opposition nor support for the use of wood-based fuels for energy
Public opinion production in the Baltic States. In Estonia, most concerns are related to the unsustainable
use and the potential for over-exploitation of forest resources (i.e., increase of wood
harvested for energy production). Other concerns of public are related to the potential
increase in electricity and heat prices if energy production from wood-based fuels is
promoted.
19
Data from enterprises
34
Key considerations for and against further development of energy production from wood-
based fuels in the Baltic States are listed below.

Do not increase CO2, SO2 or Potential for non-sustainable use of forests
NOx emissions e.g., over-exploitation
Promotes appropriate utilization of
forest residues
Domestic renewable energy source High investment costs especially for
establishment of infrastructure
High efficiency
Unfavourable market prices for energy
Low price and operational costs production from wood
Creation of job opportunities for Export of wood and wood by-products
local inhabitants is becoming more profitable
All three Baltic States have good experience in using wood-based fuels for energy
Conclusions production (mainly heating). It can be envisaged that the proposed EU limitations (EC
Directive 1999/32/EC) on sulphur content (1%) in heavy fuel oils will also promote the
use of RES for energy production, especially for district heating. An important issue is the
promotion of technological innovation to increase the efficiency of wood-based fuels in
heat production.
In order to promote the use of wood-based fuels in domestic energy production

favourable economic conditions and government support must be ensured. Otherwise,
export will increase to those countries having more favourable policies and market prices.
Introduction of an energy taxation system (CO2 tax) would serve to promote the use of
local wood-based fuels.
However, more efficient use of available wood fuel resources is also necessary. More
efficient wood residue and waste wood collection and utilization systems are required
and possibilities for growing short rotation energy forests in areas not suitable for
agriculture should be considered. Long-term planning for the utilization of forest
resources should take into account environmental concerns and should maintain natural
diversity and productivity to protect forests from depletion.
Support is needed for local municipalities in establishing the infrastructure for the
collection, transportation, storage and utilization of wood-based fuels having high
investment costs. However, municipalities who are primarily responsible for energy
production in district heating are limited in their capacity to take new loans. As the use
of wood-based fuels is mainly based on short-term agreements (e.g., for one heating
season or one year), this does not create a good basis for long-term investments required
to cover the high initial costs. Therefore, government programs that support the
development and use of wood-based fuels in the energy supply are necessary.
35
36
6.4
Straw bales in Saulaine, Bauska district, Latvia
Straw
Resource Due to historical developments and practices large land areas are used for agriculture in all
three Baltic States: 32% in Estonia, 45% in Latvia and 62% in Lithuania. With regards to
available the availability of straw resources for energy (mainly heat) production, Lithuania has the
highest potential (Table 6.13). The potential for energy production from straw has not
been fully explored. Presently, straw is used mainly for agriculture purposes (i.e., fodder
or litter). Straw is also often burned or left in the fields.
Historical So far straw has not been considered a significant source of energy. Thus, there are only a
few boiler houses in the Baltic States that are equipped to use straw as a fuel.
overview
and present
situation
Table 6.13 Energy production from straw in the Baltic States in 2000

Straw available for 0.1 0.15-0.57 0.5
energy production,
million tonnes
Number of boiler houses 3 1 7
(in Võru and (in Saulaine, (in Pasvalys, ÿilutò ,
Jõgeva counties) Bauska district)* Ukmergò and
Jonava districts)
Installed thermal 0.5-0.8 1.36 4.49
capacity, MW (each boiler)
Production of heat, not available 20 180
TJ/year
Potential energy 1300 2200 5400
production, TJ/year
* Presently the largest potential to use straw for energy production is in Bauska, Dobele, Jelgava and Saldus
districts.
Source: Estonia: Report of the Renewable Energy Commission, 2000; Latvia: Program for use of renewable
energy sources, 2000; Lithuania: ›alkauskas, A., 2002
However, experience from Denmark has promoted an interest in the possibilities of using
straw as a source of energy in the Baltic energy sector. So far the greatest number of
projects on energy production from straw have been launched in Lithuania. Three
examples of projects are further presented.
37
Latvia
Saulaine secondary school boiler house for heat production from straw was installed in 1999. The
project was financially supported by the Danish Energy Agency. The boiler requires 1.3 thousand
tonnes of straw per year. The straw must be pressed into bales (500-600 kg) using a special press.
Bales are stored in a nearby storehouse. Four boilers operate in a discontinuous regime. Produced
heat covers the local demand of the settlement of Saulaine. If necessary, wood-based fuels, as well
as, peat can be used.
Lithuania
Narteikiai central heating boiler is the first straw boiler installed in Lithuania. The construction of this
boiler was the outcome of a project supported by the Danish Energy Agency. The Narteikiai central
heating boiler was constructed in 1996. The boiler is a “REKA” product with a capacity of 1 MW. The
straw loading system is fully automated; straw is chopped and loaded by jackscrew to the boiler. The
heat produced by this boiler is used by Joni¯kelis Agriculture College.
Juknai‡iai central heating boiler

The Juknai‡iai central heating boiler was installed in 2000 and has a total installed capacity of 1.4 MW.
It supplies the settlement of Juknai‡iai. The boiler-house has four boilers that use straw that is pressed
into rolls. One roll at a time is loaded by tractor into the boiler. The burning time is about 5 hours.
After burning ashes are manually removed to a special storage place and in the Spring or Autumn are
used as fertilizer in agriculture.
Saulaine boiler house, Latvia
Future The main potential for the use of straw for energy production in the Baltic States is in local
applications where the resource is readily available and high transportation costs can be
perspectives avoided. Thus the greatest potential for the use of straw is envisaged in small-scale boiler
houses (about 2 MW).
In Lithuania, in particular, energy production from straw is assumed to have a high

potential. In order to utilise this potential new boilers having a total capacity of 250 MW
should be installed. According to the National Energy Efficiency Programme energy
production from straw could increase to 1500 GWh per year by 2005. However, this
potential can only be realised if economic incentives are sufficient.
Market The main investments are associated with the installation of boilers for heat production
from straw and for preliminary treatment equipment for straw (e.g., special press for the
investments production of straw bales, straw cutting equipment). In Lithuania, investment costs for the
installation of straw boilers are calculated at 580 Euro/kW (pay back period of about 5
and price years)20. To date projects for heat production from straw in Latvia and Lithuania have been
supported by foreign aid. Presently, investment costs are too high for small municipalities
to finance them alone.
The purchase price for heat generation from straw is set only in Lithuania by the State
Prices and Energy Control Committee on a project basis.
20
›alkauskas, A., 2002
38
Public opinion The use of this inexpensive local energy source for heat production has the support of
local residents. Utilisation of straw for energy production at local level is viewed positively
by farmers, since it can provide an additional source of income.
The positive and negative aspects of energy production from straw are listed below.

Less air pollution compared to straw Gathering of straw is possible only during
burned in fields a short period (in July and August),
therefore relatively large storage facilities
Sustainable use of agricultural waste
are necessary
Cheap energy resource High investment costs for technologies
compared to non-renewable sources and
Low operational costs
wood-based fuel
Potential income source for farmers
High quality standards for volume and
moisture content of straw
Although readily available locally, straw has not been widely used for energy generation
Conclusions in the Baltic States. Good results have been achieved by implementing a few small-scale
local projects. The use of straw helps to diversify the energy supply system and to meet
environmental standards. However, more practical experience is needed in order to
evaluate the feasibility of using straw as a fuel on a larger scale.
39
40
6.5
Energy conversion unit, RÏga municipal landfill “Getlii EKO”,
Latvia
Biodegradable waste
Waste can be used as a source of energy either through methane (CH4) containing gas
production from biodegradable fractions of waste, which later is burned for energy
generation, or by direct incineration (e.g., household waste). According to the Directive
2001/77/EC, only landfill gas, sewage treatment plant gas and biogas obtained from
organically degradable waste is considered a renewable energy source. Incineration of
non-separated municipal waste should not be promoted under the future support
systems for RES. Therefore energy production by household waste incineration is not
covered in this study.
Production of gas (consisting of 50-65% or more methane) occurs during digestion

processes and can be collected in landfills, sewage treatment plants and farms. In order to
produce biogas, collection of a separate biodegradable fraction must be ensured which is
further treated in specially designed reactors.
Landfill gas Collection of landfill gas should first of all be considered an environmental protection
measure to reduce emissions to the atmosphere. Energy (electricity and/or heat)
production from landfill gas is an additional benefit.
Gas engine at RÏga municipal landfill “Getlii EKO”, Latvia
41
Currently, landfill gas is collected only in a few landfills in the Baltic States as presented
below.
Estonia
In Estonia there is only one landfill “Pääsküla” where the landfill gas is collected for heat production in
a boiler plant, which provides heat to 1000 flats. The annual landfill gas production is 2.8 to 3.2 million
m3 and annually about 15 GWh (54–65 TJ) of heat is produced. In the summer of 2001 electricity
generation was also started.
Latvia
Presently, the use of landfill gas for electricity generation has commenced at the RÏga municipal landfill
“Getlii EKO”. Five generators have been installed at the landfill with a total electrical capacity of
5.24 MW. Energy production started in the Autumn of 2002. Produced energy fully covers the local
electricity and heat demand. The plant is also connected to the power grid of “Latvenergo” to which
excess produced electricity is sold.
Energy generation from landfill gas is planned in all new landfills to be constructed in Latvia. The
Liep‚ja landfill CHP, with a capacity of 1.3 MW, is set to commence operations.
Lithuania
In Lithuania landfill gas collection systems have not been introduced. There is only one project under
preparation for landfill gas collection in the “Lapò s” landfill in Kaunas region.
Methane for energy generation is produced from sewage sludge from wastewater
Biogas from treatment plants (WWTPs) as part of an anaerobic digestion process. Examples in the
sewage sludge Baltic States are presented below.
Estonia
In “Tallinna Vesi” (on the Paljassaare peninsula) about 2.7 million m3 of biogas (12.3 GWh/y or 44 TJ/y)
is annually produced by sludge digestion and used for heat production. The energy production based
on a similar technology will also be introduced in “Narva Vesi”.
Latvia
Biogas has been used as a fuel in a boiler house at the RÏga WWTP since the end of 1991. In 2001,
CHP was installed and 4.6 GWh of electricity were produced and used for local consumption.
Lithuania
In Lithuania biogas production from the Utena WWTP was initiated and financed by state company
“Utenos vandenys”. The installed thermal capacity of the boiler is 440 kW and electricity generation
capacity is 275 kW.
Biogas from Collection of biogas from organic agricultural waste (e.g., manure, sludge) can be
considered a perspective energy source for the Baltic States. Current experience is limited -
agricultural only a few energy production projects have been carried out in all three countries.
waste
Estonia
In Estonia organic agricultural waste (manure, sludge) has in the past been used for biogas production
in the Linnamäe collective farm and the Pärnu pig farm.
Latvia
The amount of biogas collected from a few pig farms is about 1.8 million m3/year. The estimated
potential production capacity is 59 million m3/year.
Lithuania
A co-generation biogas power plant was constructed at the Vy‡ia pig farm by the Danish Folkecenter
for Renewable Energy. The project was partly financed by the Danish Environmental Protection
Ministry. The manure produced (60 m3/day) from the 11000 pigs is converted into a "more ready to
use" fertiliser by the anaerobic digestion. The produced biogas is burned to generate electricity and
heat by co-generation thus significantly reducing the energy demand of the farm. The installed
electricity production capacity is 185 kW.
42
Market In Lithuania, investment costs for the development of biogas power plants is estimated at
200-1000 Euro/kW. The pay-back time is about 5 years21. Investment costs and the
investments pay-back period depends on the technologies and organic waste management cycle used.
and prices Power purchase prices are set individually on a project basis by the State Prices and
Energy Control Committee.
In Estonia, no governmental support for the utilization of landfill gas for energy generation
exists or has been discussed. In Latvia, according to the Law on Energy, the electricity
distribution utility buys energy from production facilities, that use household waste or a
derived product (e.g., biogas), with a capacity not exceeding 7 MW for eight years, for a
price that corresponds to the average electricity sales tariff.
Public opinion The general public has not been opposed to energy production from biodegradable waste.
However, a negative attitude is directed in general towards large landfills and storage fields
of sewage sludge at wastewater treatment pants (“not in my backyard” syndrome).
The positive and negative aspects associated with energy production from biodegradable
waste in the Baltic States are listed below.

Reduction of greenhouse effects
of methane emissions to air
Prevention of methane leakage

into water
Sustainable waste management
Good potential in principle High investment costs for technologies
(large amounts of resources available)
In all three Baltic States energy production from biodegradable waste can be considered as
Conclusions a sustainable means of waste management. Electricity production from the biodegradable
fraction of waste also supports meeting the targets of Directive 2001/77/EC. More plants
and landfills with the ability to capture methane need to be constructed if this RES is to be
utilized more fully. Separate collection and disposal of biodegradable municipal waste
would create preconditions for more effective use of biodegradable waste for energy
generation. Nevertheless, energy production from biodegradable waste requires high
investments in technologies.
Furthermore raising awareness amongst the public regarding advanced practices for
waste management (e.g., landfill gas collection and utilization for energy production) is an
important factor for further developments in this field.
22
Lithuanian Energy Institute
43
44
6.6
Peat briquettes at E˝erÈlis village, Lithuania
Peat
Peat is an energy source locally available in all three Baltic States. Although being not
commonly considered a renewable energy source (due to the long time span required for
building up a harvestable peat deposit, in comparison, for example, to wood biomass),
there are experts22 who regard peat as a “slowly renewable energy source” and therefore
peat is also taken into consideration in this study.
Peat lands cover approximately 22.3% of the territory of Estonia, 10.7% of Latvia and
Resource 6.4% of Lithuania. The term “peat land” specifically refers to areas where the thickness of
available the peat layer is greater than 0.3 meters. Peat lands having an area exceeding 50 hectares
and a minimum peat depth of 1.3 meters are considered economically viable for peat
extraction. The amount of resource available, extraction rates and the potential for energy
production is indicated in Table 6.14.
Table 6.14 Peat resources, current use and energy production in 2001
Remaining Annual average Total peat Energy Potential for

exploitable net peat mined, productio energy
Country reserves, increment, thousand from peat, production
million tonnes thousand tonnes TWh/year TWh/year*
tonnes/year
ESTONIA 775 500 844 1.687 not available
LATVIA 330 800 469 0.346 2.0
LITHUANIA 117 372 259 0.180 1.4
* Economically feasible
Source: Estonia: Report of the Renewable Energy Commission, 2000; Energy Balance 2001; Latvia: Programm
for peat extraction and utilisation, 1998; Latvian Peat producers association; Peat in Latvia, 2000; Lithuania:
Department of Statistics; Baltic State of the Environment Report, 2000
Presently, in all three Baltic States the amount of peat mined per year is below the annual
increment. However, in order to ensure sustainable use of peat resources, in Estonia the
Government regulation on “Sustainable Use of Estonian Peat Resources” (1996) has been
approved establishing maximum annual extraction rates up to December 31, 2005.
Similarly, in Latvia a program on “Peat extraction, processing and utilization in energy
sector” was developed in 1998 with PHARE support.
22
Estonia: PhD Veski, R.; Latvia: ÿnore, A., 2000; Finland: Crill, P., Hargreaves, K.,
Korhola, A., 2000
45
Historical Peat extraction and use for industrial and energy purposes in the Baltic States started at
the beginning of the 19th century. In Latvia, during the second half of the 20th century
overview and peat was widely used for electricity generation and heat production (e.g., 27% of fuel
balance in 1960).
present
situation Although there are considerable fuel peat resources available, currently utilization of peat
in the energy sector is quite limited in opposite to other applications (e.g., agriculture,
horticulture). Thus, in 2001 the share of peat in the total primary energy supply
constituted 0.6% in Estonia, 0.7% in Latvia and 0.1% in Lithuania.
Most of the equipment currently used for energy production from peat is inherited from
the past and investments for reconstruction of boiler houses are necessary. Examples of
the use of peat for electricity and/or heat production in the Baltic States are presented
below.
Estonia
I9 boiler houses are operating. In 2001, peat was used for the production of 20 GWh of electricity and
590 TJ of heat, based on 801 TJ of fuel. Data on the potential of peat for energy production are not
available. In Sangla and Turba Peat Briquette Plants electricity and heat are co-generated. The installed
electrical capacities by CHP production are 2.5 MW and 5 MW, respectively. Data for heat production
capacities are not available.
Latvia
Energy production from peat is concentrated in areas where it is extracted and in Riga. Up to now the
largest user of fuel peat was the CHP facility in the Riga “RÏga Tec-1”. In 2001, the plant used
approximately 27000 tce of milled peat, together with natural gas to produce heat and electricity. In
2003, “Riga Tec-1” is being reconstructed to produce energy using only natural gas. Currently, there
are also several small boiler houses and one CHP in Stru˝‚ni using peat for energy generation.
Lithuania
Only two boilers using peat are presently operating. One of them, the Paliai boiler, was constructed in
1967. The installed capacity of the boiler is 6.8 MW and it supplies heat to private houses in the
village of Igliauka. Another boiler – “E˝erelis” supplies heat to the village of E˝erelis. The installed
capacity of this boiler is 4.5 MW. Both boilers are owned by the energy utility company “Kauno
energija”.
Large amounts of peat, mainly for agricultural purposes, are being exported. For energy
production, peat briquettes are mainly exported to Sweden where the demand is high
since the CO2 produced from peat briquette combustion is not subject to taxation.
It is anticipated that energy production from peat in next few years will not largely
Future increase in all three Baltic States. Presently, only in Latvia there is a proposal under
perspectives discussion for the construction of a CHP based on peat fuel. Among the drawbacks of the
use of peat is its high ash content, which raises waste treatment/disposal costs and the high
concentration of solid particles, which requires complicated and expensive treatment of
emissions to the atmosphere. Therefore, for example, in Lithuania it has been
recommended not to develop the peat energy sector using big boilers with capacity
more than 6 MW.
In a longer perspective peat may prove to be a good alternative energy source, particularly
in those areas rich in peat and having a shortage of other resources, for example,
wood-based fuels.
Market In all three Baltic States existing economic conditions do not support the use of peat and
peat products for energy production. In Estonia, according to the current legislation,
investments incentives for renewables do not extend to peat. Similarly, in Latvia only the purchase
price for power generated from small-scale CHP plants (capacity < 4MW) can be
and price considered as favourable. In Lithuania, the power purchase price is set on the basis of
individual projects by the State Prices and Energy Control Committee. The price is
calculated taking into consideration fuel and operation costs. Each producer is required to
justify the price. This type of pricing system also does not promote peat energy use.
46
Public opinion There is no clearly expressed public opinion about the use of peat for energy production.
In Latvia, however, two opposing opinions are commonly heard: peat resources are
already fully exploited or that the exploitation of peat as a local source shall be given
priority over other fuels. The positive and negative aspects for energy production from
peat in the Baltic States are summarized below.

Local source Excavation of peat lands has
Cheap energy source negative impacts on biodiversity
Creation of new job places High content of solid particles greatly
increases the cost of treating emissions
High investment costs in technologies are
necessary
Weather conditions strongly influence the
harvest of peat thus causing instability in
supply
Conclusions The use of peat for energy production in the Baltic States is controversial. In addition to
peat reserves being found in wetlands that are important for biological diversity, the
question of the contribution of peat to the greenhouse effect is also debated.
Although a local energy source, the future of peat for energy production in all three Baltic
States seems doubtful. Currently, the Baltic States prefer to use other local fuels.
However, recently at least in Latvia, local municipalities are showing an increased interest
in use of peat for heat production.
47
48
7
CONCLUSIONS
The benefits resulting from the increasing role of renewable energy sources (RES) in the
electricity and heat sectors of the Baltic States go well beyond their contribution to the
energy balance. The benefits comprise positive contributions to the environmental, social
and economic development of the national energy sectors, although these benefits are often
not fully accounted for in the energy generation costs of RES technologies. Additionally, RES
contribute to the security of the national energy supply, which is becoming increasingly a
more important objective of the energy policies of EU Member and Candidate Countries.
As outlined in this study, it is obvious that utilisation of RES technologies also has negative
impacts. For instance, RES systems may have negative impacts on natural habitats and
visual aspects of the landscape. In order to minimize these impacts it is crucial to use
objective and transparent criteria when planning and implementing RES projects. Public
involvement should be considered from the very start of a project.
However, when comparing different technologies in the energy sector, it needs to be

recognized that most energy sources and all energy technologies, to a certain extent,
negatively impact the environment. Technologies based on the combustion of fossil fuels
(such as coal, oil, gas) are the main sources of greenhouse gas emissions such as CO2. At a
regional level, fossil fuel technologies emit substantial amounts of air pollutants, such as
acidifying emissions (e.g. NOx and SO2), particulate emissions (e.g., dust), organic
compounds and heavy metals. Conventional electricity generation in nuclear power
plants produces different categories of solid, liquid and gaseous radioactive waste.
Additionally, associated with the operation nuclear facilities is the risk of major accidents
and releases of radioactivity.
A comparison of different technology options and fuel sources to satisfy the demand for
electricity and heat requires an honest and objective evaluation of all pros and cons
associated with the respective option. Due to the vast environmental impacts associated
with conventional energy sources in most cases RES technologies compare quite
favourably.
There is a considerable amount of good experience and progress achieved using different
RES for energy production in all three Baltic States. The target to promote the use of RES is
included in the National energy strategies and programs of all the Baltic States. Furthermore,
in order to promote energy (particularly electricity) production from RES, the first steps to
implement appropriate and concrete national legislation have been undertaken.
Nevertheless, these first steps should be supplemented by several additional actions and
measures in order to overcome existing obstacles for the long-term development of RES
in the energy sector of the Baltic States. National support frameworks should address
barriers at different levels. As outlined in the previous chapters, economic, administrative
and structural barriers exist that need to be eliminated. Although in the short- and
middle-term financial support for RES should be one of the main priorities, economic
measures should be accompanied by several non-financial measures in order to allow RES
to develop in compliance with, for example, climate targets.
A system of measures to support RES in the energy sector of the Baltic States should
emphasize the following actions:
7.1 As long as renewable technologies are not competitive with electricity generation from
conventional fossil fuels, the development of renewable energy production should be
Monetary stimulated and shaped with financial support. Several financial support instruments (e.g.,
feed-in tariff systems, obligation schemes) exist (at least for the electricity sector) and a lot
support of experience with different support mechanisms is available from the EU Member States.
When developing and designing a financial support instrument the following aspects should
be taken into account:
What are the targets for renewables in the electricity and heat sector? Which
technologies should contribute to the targets?
How cost efficient is the instrument (in terms of spent money per kWh of RES
generated energy)?
Does the instrument ensure sufficient business security for investors in renewable
energy systems?
Does the instrument attract investments from abroad?
Does the instrument provide incentives for RES operators to run their RES
systems cost effectively?
49
Administrative support is just as important as the financial support. Many projects in the
7.2 renewable energy sector, which in general would be economically viable, have not been
Administrative implemented because project proponents face too many administrative hurdles. In many
cases administrative barriers have led to projects or project phases being unreasonably
support delayed increasing project costs. Therefore, it is necessary for the governments and
institutions of the Baltic States to implement an open and transparent regulative
framework that allows project developers and RES operators to work in a predictable
administrative setting. Administrative measures that should be implemented include:
Transparent and straight forward licensing procedures (taking into account
public involvement and environmental impact assessments);
Fair grid access for renewables (e.g., for electricity and heat generated from RES);
Fair and transparent mechanisms to allocate costs for operating the grid and
extending it where necessary.
Additionally, it is important that licensing authorities have sufficient qualified and

experienced staff to facilitate implementation of clearly defined procedures.
7.3 The development of RES requires further research. Apart from hydropower plant
technology in the electricity sector and conventional biomass technologies in the heating
Research and sector, most renewable technologies are still in the developmental stages. This particularly
applies to the utilisation of offshore wind, biogas, and solar energy for electricity
development, generation (photovoltaics). In the long-term also geothermal energy may contribute to the
pilot projects energy systems of the Baltic States, once the respective technologies have been developed
to market maturity. Research is necessary to increase the efficiency of renewable
technologies and to secure and further enhance their durability. Research should not only
focus on pure technologies, but also on methods to integrate renewables in existing energy
systems.
Pilot projects are essential to introduce renewable technologies (e.g., offshore windparks,
photovoltaics on public buildings) to a broader expert public. Pilot projects with
renewables serve as a source of experience in the operation mode. Project developers get
the opportunity to test and experience new technologies and concepts.
The so-called “soft” instruments serve to shape the aforementioned measures into a
7.4 consistent policy framework. Soft support instruments include:
Soft Education and training of those who will be involved with the planning, development,
operation or promotion or renewable energy projects;
instruments Establishment of state or public institutions promoting RES activities; raising public
awareness regarding RES, in combination with climate change mitigation issues,
through the media, informative brochures, study programs, etc.;
Organization of conferences, workshops for experts and project developers
concerning legislation, technologies, market and financial instruments for RES.
The effectiveness of support instruments for RES is less dependant on the individual
measures chosen. It is more important to introduce and design consistent packages of
measures that complement each other. For all proposed measures the existing policy and
legal framework needs to be considered as well. Efficient development of renewable
technologies can only be ensured in a policy framework that is consistent in its objectives
and orientation. In addition to the design of a support framework, regular monitoring and
evaluation of the effectiveness of the instrument package is necessary. If during
implementation it is apparent that RES targets will not be met, there must be sufficient
flexibility to allow needed adjustments to be made.
RES play an important role in restructuring the national energy sector towards a higher
degree of sustainability. However, given the economic constraints faced by the Baltic
States, other alternative measures should be considered as well. Other options to
reduce the environmental impact of the energy sector especially include reinvestments in
technologies based on conventional energy sources (particularly fossil fuels) to increase
their efficiency. In many cases such measures may be more sustainable than to solely focus
on the use of RES.
50
8
ANNEX
Figure A.1 Total primary energy supply in ESTONIA (TJ/year)
800000
600000
TJ 400000
200000
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Non-renewable energy sources Peat Renewable energy sources
Figure A.2 LATVIA (TJ/year)

Total primary energy supply in ESTONIA
800000
600000
TJ 400000
200000
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Figure A.3 Total primary energy supply in LITHUANIA

ESTONIA (TJ/year)
800000
600000
TJ 400000
200000
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
51
Figure A.4 Share of renewable energy sources from total primary energy supply in ESTONIA (%)
12
10
6
%
4
0
1990 1992 1994 1996 1998 2000
Wood Hydro and wind Total
Figure A.5 Share of renewable energy sources from total primary energy supply in LATVIA (%)
35
30
25
20
%
15
10
0
1990 1992 1994 1996 1998 2000
Wood Hydro Total
Figure A.6 Share of renewable energy sources from total primary energy supply in LITHUANIA (%)
10
6
%
4
0
1990 1992 1994 1996 1998 2000
Wood Hydro Total
52
Figure A.7 Share of different energy sources in primary energy supply in ESTONIA in 2001 (%)
Figure A.8 Share of different energy sources in primary energy supply in LATVIA in 2001 (%)
Figure A.9 Share of different energy sources in primary energy supply in LITHUANIA in 2001 (%)
Source: Estonia: Statistical office of Estonia, Latvia: Central Statistical Bureau of Latvia; Lithuania: Lithuanian
Energy Agency
53
54
9
REFERENCES
ESTONIA 1. Estonian Encyclopedia, vol. 11, Tallinn, 2002 (in Estonian).

2. Estonian Energy Balance 2001, Statistical office of Estonia, Tallinn, 2002.
3. Estonian Statistical Yearbook 2002, Statistical office of Estonia, Tallinn, 2003.
4. Heinsoo, K. et al. Willow plantation: energy resource and vegetation filter.
Conference proceedings. Investigation and usage of renewable energy sources,
Tartu, 2001.
5. Kask, Ü. Combustion of wood. Master’s theses. Tallinn Technical University,
Tallinn, 2002 (in Estonian).
6. Kull, A. Estonian Wind Atlas. Institute of Geography, Tartu University, UNDP,
Tartu, 2003 (in edition).
7. Mander, Ü., Strandberg, M., Mauring, T., Remm, K. Wetland as essential basis for
sustainable development: Estonian case. In: Villacampa, Y., Brebbia, C. A. and
Uso, J.-L. (Eds) Ecosystems and Sustainable Development III, WIT Press,
Southampton and Boston, 459-467, 2001.
8. Paist, A., et al. Possibilities for biomass usage for energy generation in Estonia.
Ministry of Economical Affairs, Tallinn, 1992 (in Estonian).
9. Raesaar, P. Hydroenergy in Estonia, Tallinn, Taasen, 1995 (in Estonian).
10. Report of the Renewable Energy Commission at the Ministry of Economic Affairs
and Communications, 2000.
11. Estonian Energy, Ministry of Economical Affairs, www.mkm.ee, 2001.
12. Tomson, T. Simultaneity of the Wind Power in Estonia. Proc. of the Estonian
Acad, Sci., Engineering, 8, 270-275, 2002.
13. Tomson, T., Hansen, M., Nõva, A., Puust, M. Abatement of wind off the coastal
line. Investigation and Usage of Renewable Energy Sources, Proc. of the Third
Conference, 102-108, Tartu, 2002 (in Estonian, English).
14. Tomson, T., Steady-State Variability of Wind. Institute of Geography, Tartu
University, 93, 206-216, Tartu, 2003, (in Estonian).
Private consultations with leading specialists of Tartu University, Tallinn Technical
University, “Eesti Energia” and “Generaator E&K".
LATVIA 1. Bio fuel production and utilization in Latvia. National Program (draft), 2002.
2. Encyclopaedia, Latvian Nature, Riga, 1998.
3. Program for use of renewable energy sources. Final report. PHARE, Riga, 2000
(in Latvian).
4. Programm for peat extraction and utilisation, Riga, 1998 (in Latvian).
5. ÿnore,Riga, A., Peat in Latvia, (informative review issued by the „Latvian Peat
producers association”), Riga, 2000.
6. The forest policy of Latvia. Forest sector state administration, 2002.
7. Third National Communication of the Republic of Latvia under UN FCCC,
Riga, 2001.
55
LITHUANIA 1. Blue energy for a green Europe. Strategic study for the development of small
hydro power in the European Union. Report of Altener programme. ESHA,
Brussels, 2001.
2. Burneikis, J., Jablonskis, J. Assessment of usage small hydroenergy in Lithuania,
Kaunas, 1998 (in Lithuanian).
3. Burneikis, J., Streimikiene, D., Punys, P. Technical, economic and environmental
feasibilities of Nemunas hydro energy utilization. Proceedings of the 4th
International conference on Hydropower Development, Bergen, Norway,
ISBN 90 5809 195 3. 2001.
4. Energy in Lithuania 2002, Lithuanian Energy Institute, 2003 (in publication).
5. Enhancement of the use of local and renewable energy sources – Lithuania, 1st
Progress report. “Dansk Energi Management”, 2003.
6. Investigation of the effective reaches of the rivers, including Nemunas and Neris,
for hydropower development and establishment of the master plan of
hydropower resources. Report to the Lithuanian Ministry of Economy carried out
by Lithuanian Hydropower Association, Kaunas, 2002 (in Lithuanian).
7. Single programming document of Lithuania 2004-2006.
8. Survey of energy resources 2004. World Energy Council (in publication).
9. The Lithuanian renewable energy server, http://saule.lms.lt.
10. The National energy efficiency programme 2001-2005.
11. Wind energy - the facts, European Commission, 1999.
12. ›alkauskas, A., Straw utilization for energy production in Lithuania, 2002
(in Lithuanian).
OTHERS 1. Crill, P., Hargreaves, K., Korhola, A. The role of peat in Finnish greenhouse gas
balances. Ministry of Trade and Industry, Finland, 2000.
2. Baltic State of the Environment Report, Riga, 2000.
3. European Climate Change Program http://www.europa.eu.int/comm/environ
ment/climat/eccp.htm.
4. Peat - resources and market. Fact Sheet 6/98, The Swedish Bioenergy
Association, 1998.
56

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Electricity generation (photovoltaics) and heat production from solar energy on a

Directive 2001/77/EC on the promotion of electricity produced from renewable

The main requirements of the Directive are the following:

Presently the energy policy in ESTONIA is based on the:

In LITHUANIA, based on the Law on Electricity, a procedure for the purchase of

Areas suitable for wind Potential for wind

Wind turbine generators in Aina˝i, Latvia

Site Launched WTG Capacity, kW

* Located in the coastal area nearby Liep‚ja and Grobia

Source: Central Statistical Bureau of Latvia

Table 6.3 New projects for WTGs construction in Estonia

Project/ investor Site Capacity, kW

“Pakri Wind Park”* (EU support) Pakri peninsula 8 x 2500

* Building license ** Project stage

Large-scale wind farm in western part of Lithuania

Wind turbines between G a r g Ï d a i and VòÏaiãai

Rietavas, Priekulò and ·ilalò

ESTONIA LATVIA LITHUANIA

Positive aspects Negative aspects

Table 6.5 Hydropower resource in Estonia, Latvia and Lithuania

Parameters ESTONIA LATVIA LITHUANIA

Total number of rivers 525 880 758

Electricity production in HPPs, particularly small-scale, is very dependent on the amount

ESTONIA LATVIA LITHUANIA

Total capacity of large- - 1535 100

ESTONIA LATVIA LITHUANIA

Põltsamaa River Tartaks River (1200 kW) the Strò va River

Total capacity of small 1.9* 14.7 15.0

Kavarsko hydropower plant on the ÿventoji River, Lithuania

Source: Central Statistical bureau of Latvia

Share of hydro energy: ESTONIA LATVIA LITHUANIA

* Wind and hydropower together

Large-scale HPP on the Nemunas River

Large-scale HPP on the Neris River

Construction of new HPPs especially on small rivers is a source of environmental concern

ESTONIA LATVIA LITHUANIA

* Calculated according to the current legislation in each country

Positive aspects Negative aspects

Loss of habitats and breeding sites due

Damage to certain tree species due to

fluctuations in water level

ESTONIA LATVIA LITHUANIA

Area covered by forests, 2 3 2

Felling volume of wood, up to 13** 11 4

Production of wood briquettes, "Valstras", Ukmergò, Lithuania

ESTONIA LATVIA LITHUANIA

In order to reduce consumption of firewood, utilization of other wood-based fuels (e.g.,

Wood boilers in Molò tai schools

ESTONIA LATVIA LITHUANIA

Positive aspects Negative aspects

In order to promote the use of wood-based fuels in domestic energy production

ESTONIA LATVIA LITHUANIA

Juknai‡iai central heating boiler

Saulaine boiler house, Latvia

In Lithuania, in particular, energy production from straw is assumed to have a high

Positive aspects Negative aspects